Payments

Eye on Payments 2019: Part II – Debit Preferred, Even Online

By: Tom Pierce, Chief Marketing Officer

It may surprise you to learn that a shift in preferred payment method occurred over the past year, where people of all ages are now reaching to pay with debit instead of credit – even for online purchases.

Welcome to part II of our blog series on Eye on Payments 2019. This annual payment study by PSCU examines the factors that influence consumers when it comes to their choice and usage of different payment methods.

In our first blog from our 2019 study, we revealed that convenience and ease of use are now the main drivers behind a consumer’s choice in payment method, toppling last year’s motivator of security. Today, we’re going to dive deeper into the reasons behind this newfound debit preference, and look at how younger generations, in particular, are using debit to assuage their fear of debt.

Consumers Choose and Trust Debit for Online Purchases

While ease of use (64%), convenience (62%) and comfort of use (51%) were some of the top reasons cited for this year’s debit preference, an overall increase in American debt, concerns about an upcoming recession and the budget-conscious qualities of today’s younger generations are all factors in this year’s shift. Additionally, advanced features in the way of mobile card alerts are helping give consumers more control over their debit activity, and lessening fears around fraud. Perhaps this is why PSCU saw the shift to debit begin to take place around major shopping events from the past 12 months, like the 2018 holiday season and 2019’s Amazon Prime Day.

Nearly 96% of all survey respondents report making online purchases at least a few times per year, with 57% of credit union members and other financial institution customers making an online purchase at least a few times per month. Overall, respondents prefer to pay for online purchases, order-ahead food and streaming services with a debit card. This further supports the finding that convenience does indeed trump security as a primary motivator behind payment preference in 2019.

Still, we mustn’t let our guard down. Recently, one of my personal, digital subscription services was hacked. Though naturally anxious, I felt some consolation in knowing that I linked my credit card to that service’s billing, as opposed to my debit card. For me, this incident reaffirms my reluctance to use debit for online purchases. And it prompts me to remind credit unions that opportunity still exists to educate members on managing their safety of debit usage. I, like many others, am listening. I want to be encouraged by the security advancements that currently exist, and I want to be made to feel less vulnerable when reaching for my debit card, especially when activating mobile alerts for my card usage.

Contrary to popular belief, debit card programs can be just as profitable for credit unions as credit card programs. So, what can your credit union do to help convert reluctant debit users?

  1. Educate members on debit safety (i.e., alerts and controls), and ensure that your debit programs are consistently optimized and improved for security.
  2. Push for earning top-of-card-file positions across online and digital channels (i.e., Netflix, PayPal, Amazon, etc.). Once a user stores a card as a preferred payment method in these channels, they are unlikely to change it.
  3. Execute data-driven marketing campaigns as part of your strategy to assure members that debit cards are safe, and there is benefit to usage.

Want to learn more? Download the full Eye on Payments 2019 study now! Explore the key takeaways that your credit union can leverage to effectively market to members and achieve enduring debit success.

In his role as SVP, Chief Marketing Officer, Tom Pierce is responsible for leading and executing PSCU’s marketing and communications strategy. Pierce has successfully led marketing teams for more than 30 years, with the latter half of his career spent in the payments industry. Prior to joining PSCU, Pierce served as Chief Marketing Officer for Cardtronics, a global ATM organization serving the retail and financial services industries, where he directed a global marketing team in the development and execution of strategic marketing and communications initiatives.